Zambia’s Finance Minister Bwalya Ng’andu projects the country’s economy will contract by at least 3% in 2020, as manufacturing, retail and wholesale trade, tourism and travel industry post negative growth rates.
The copper producing nation became Africa’s first pandemic-era sovereign country to debt default last month, after it failed to pay a $42.5 million coupon on one of its Eurobonds.
Last week, President Edgar Lungu and International Monetary Fund (IMF) Africa department head Abebe Selassie met in the capital as the government lodged a “financial assistance request” to the global lender to help mitigate a biting debt crisis.
Even before the COVID-19 pandemic, Zambia’s economy was struggling due to low prices for its main export – copper — and rampant corruption that shot up during Lungu’s presidency.
The IMF had classified the country as in debt distress.
The government sought broad relief from its creditors and requested Eurobond holders grant it a deferral of interest payments until April.
But bondholders rejected that request, criticising the government for a lack of engagement and a failure to provide transparency, particularly on debt owed to other creditors, including China.
Zambia’s $3 billion in outstanding Eurobonds is not its only debt. It owes $3.5 billion in bilateral debt, $2.1 billion to multilaterals and $2.9 billion to other commercial lenders.
Debt to China’s Exim Bank amounted to $2.6 billion at the end of 2019, making up the lion’s share of the $3 billion Lusaka owed to China and Chinese entities.